IMF forecast for GDP growth unchanged, inflation revised up

The International Monetary Fund (IMF) said it expects Croatia's GDP to grow by 2.8 percent in 2018, and to decelerate to 2.6 percent in 2019, according to the latest issue of the IMF's World Economic Outlook released this week.

This means that the projected economic growth for Croatia in 2018 and 2019 remained unchanged from the previous Outlook issued in April.

However, the country's expected inflation rate in 2018 has been revised to 1.6 percent, up from the previous forecast of 1.5 percent. In 2019, the inflation rate is likely to be 1.5 percent.

Croatia's unemployment rate is projected to drop from 12.4 percent in 2017 to 12.0 percent in 2018, and further down to 11.2 percent in 2019.

The report also noted that Croatia's current account balance surplus could slide from 3.9 percent of GDP in 2017 to 2.7 percent of GDP in 2018, and to 2.3 percent of GDP in 2019.

The IMF's forecasts for Croatia's economy are mainly in accordance with the projections of other analysts.

Projections for Croatia's GDP growth in 2018 range between 2.3 percent - as calculated by Raiffeisenbank Austria (RBA) - and 2.6 percent - as projected by the European Commission, up to 3 percent - which was forecast by Addiko Bank and the Institute of Economics in Zagreb.

The Zagreb government had based their budget planning for this year on the projected rate of growth of 2.9 percent.

Globally, the IMF revised down its projections for the growth of the world's economy to 3.7 percent from 3.9 percent in April.

"The steady expansion under way since mid-2016 continues, with global growth for 2018–19 projected to remain at its 2017 level. At the same time, however, the expansion has become less balanced and may have peaked in some major economies. Downside risks to global growth have risen in the past six months and the potential for upside surprises has receded," said the report.

"Global growth is projected at 3.7 percent for 2018–19 - 0.2 percentage point lower for both years than forecast in April. In the United States, momentum is still strong as fiscal stimulus continues to increase, but the forecast for 2019 has been revised down due to recently announced trade measures, including the tariffs imposed on $200 billion of US imports from China. Growth projections have been marked down for the euro area, and the United Kingdom, following surprises that suppressed activity in early 2018. Among emerging market and developing economies, the growth prospects of many energy exporters have been lifted by higher oil prices, but growth was revised down for Argentina, Brazil, Iran, and Turkey, among others, reflecting country-specific factors, tighter financial conditions, geopolitical tensions, and higher oil import bills," IMF said.